Portillo’s CEO says breakfast offerings will be considered ‘down the road’

Yahoo Finance's Brian Sozzi, Brian Cheung, and Julie Hyman speak with Portillo's CEO & President Michael Osanloo about the company's IPO, outlook, and much more.

Video transcript

BRIAN CHEUNG: And we're going to pivot from planes to hot dogs right now. Much loved Chicago dog restaurant Portillo's is about to take off on the NASDAQ under stock ticker PTLO. And to talk all about this, we are joined by CEO and President Michael Osanloo. Michael, it's great to have you on the program today. 67 restaurants in nine states, all profitable. You're shipping to 50 states as well. First of all, congratulations on the debut that's going to be happening today. What is the game plan for your capital raise in terms of expanding the company from what you've already built?

MICHAEL OSANLOO: Well, first, thank you for having me on. It is a super exciting time for all of us at Portillo's. And as you highlighted, right, it's all about growth for us. We are-- you know, while we're a 58-year-old company, we're still infants when it comes to our growth inflection point. We think there's well over 600 restaurants across the US. And that's what our capital is all about. It's about growing across a very strong foundation that we have in the Midwest. And then it's growing very strategically across the sunbelt in states like Arizona and Florida and especially Texas, where there is a lot of latent pent-up demand for Portillo's.

BRIAN SOZZI: Michael, why are folks so obsessed with your hot dogs? What's the secret ingredient there?

MICHAEL OSANLOO: Oh, I can't tell you that. But I can tell you that if you try it, you will understand. I mean, I think, you know, in all seriousness, it's just an amazingly high quality product, right? The hot dog is wonderfully made. The seven ingredients that make it a Chicago style dog. We have a culinarian on our team who is a sommelier and has worked at Michelin star restaurants. He thinks it's the best food in America, that combination of textures and flavors and sweet and spicy. You know, honestly, I got my own mouth watering here, talking about it. So the Chicago style dog, it's magical.

BRIAN SOZZI: When are you-- any plans to come out with breakfast?

MICHAEL OSANLOO: I'm sorry. What was that?

BRIAN SOZZI: Any plans to come out with a breakfast offering?

MICHAEL OSANLOO: You know, it's funny, it's probably the biggest complaint our Chicago customers have, is that we do a pepper and eggs sandwich during Lent. And we have folks lined up in our drive-thrus, outside our doors in the morning, and then it's just for a limited time period. So I get a lot of, let's call it, strong suggestions to do breakfast in Chicagoland. It's something we'll seriously consider down the road.

BRIAN CHEUNG: Mike, I want to apologize for my coworker there. I think it's just because it's 10:45 that he's thinking about that right now. But just to kind of pivot, where are your markets of focus? Obviously, in the Chicago area, the brand is well-known, well-loved. Are there certain parts of the country that you feel like might be great places to expand to? And then, secondly, what is the distribution model? Are you prioritizing more of the drive-thru versus people sitting in and dining out? I know COVID has shaken things up, but what is the model for what you would like your expansion to look like?

MICHAEL OSANLOO: Yeah, it's a great question. We are going to grow in markets where we think that there is structural tailwind behind us. So population growth in the United States, the three fastest states growing are Arizona, Florida, and Texas. No secret we're going to grow there. We know that we ship our food to Florida, Arizona, and Texas. Texas happens to be the number one place where we ship our food to. And we're going to open a flagship restaurant in the Dallas suburbs next year.

So you're going to see a lot of Portillo's growth in the core of the Midwest. Michigan is a priority for us. Ohio's a priority for us. But also across those three states along the Sunbelt. We think that building in places where there's population growth, that there's a great labor structure, et cetera, is a really good idea for our guests, our team members, and our investors.

BRIAN SOZZI: Michael, this isn't your first rodeo. You used to lead PF Chang's. Is this the most challenging labor market you have ever seen in your career?

MICHAEL OSANLOO: Yeah, I don't think anybody-- I think it's hard to put to words what goes on in the labor market. I will tell you that I think we have done a smart job in mitigating some of the impact of this because we think of, you know, the labor as our people. And I think they're our biggest asset. And I personally believe in a form of enlightened capitalism.

So during COVID, for example, we did not lay off or furlough a single person, not one person. In fact, what we did is we doubled down. We invested in our team members. We paid them bonuses. We took great care of our people. And so, in return, what we're seeing is better than industry turnover, incredible productivity out of our team members. And I think those people who treat their frontline team members as human beings and take great care of them are starting to differentiate themselves in this labor market.

BRIAN CHEUNG: Michael Osanloo, CEO and president of Portillo's, thanks again for hopping on. And congratulations again on your big day.